DENVER—A year after some franchise owners sued Quiznos over business practices, the restaurant chain’s chief executive said Monday he expects franchisee profits to increase 60 percent overall in the wake of improvements to the system.
Greg Brenneman also estimated a 32 percent increase in Quiznos’ EBITDA, or earnings before interest, taxes, depreciation and amortization, by the end of 2007, crediting a drop in food and paper costs, a restructured menu and fewer discounts, among other changes.
Brenneman made the comments during a companywide meeting at a downtown hotel attended by 640 corporate employees, area directors and selected franchise owners.
The privately held company does not publicly release financials and invited The Associated Press to attend Monday’s meeting for a rare glimpse into its business operations.
A turnaround expert for Continental Airlines and Burger King, Brenneman took over as CEO this year as dissatisfied franchisees were complaining about low profits, high food costs, company operating requirements and the franchisee recruiting process.
Some franchisees sued the company in Illinois, Colorado and Wisconsin alleging improper business practices.
Last month, a federal judge dismissed federal claims in the Wisconsin lawsuit and said remaining state claims could be filed in state court if the franchisees desired. A similar lawsuit was settled in August and two others are pending.
Looking ahead to 2008, Brenneman told the crowd the company will introduce or expand such services as delivery, catering and Internet ordering and add kiosks or smaller stands called “coolers” at universities and hospitals.
The executives also are looking into more value-priced items and ways to emphasize the health aspects of the products, said Steve Provost, who is in charge of brand marketing
Rick Staley, who owns 14 Quiznos stores in the Houston, San Antonio, and Waco, Texas, said during the lunch break he is pleased with the changes. “I wasn’t always a happy franchisee,” he said. “I’m just as happy as can be now.”
Danny Kessels, a Quiznos store owner in Boulder who said he was not invited to the meeting, said he knows of other Quiznos store owners who are struggling.
“Nothing’s really changed, in my opinion,” said Kessels, the head of an Quiznos independent franchise group called the Toasted Subs Franchisee Association. “The whole system is still on shaky ground.”
The company has about 5,000 stores.
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